As millions of homeowners have become saddled with adjustable-rate mortgages and no longer have the ability to refinance into a new loan, there may be only one solution for these stressed borrowers: Loan Modification.

What does it mean? It is when the lender of the note modifies the existing mortgage to make it more reasonable, the interest rate, term, balance, late fee maybe modified by the lender. Until recently this was only done for delinquent borrowers, however with such extraordinary circumstances it will now be used before borrowers reach this stage. This is often the right choice for borrowers looking to avoid foreclosure.

Loan Modification helps borrowers change their note and have a chance to start over as accounts are brought to date right away. By modifying your loan you change your interest rate and payments to change to a fixed rate that will be more practical for borrowers. You won’t have to pay new closing costs and fees, but if you refinance you will be responsible for the normal closing costs, taxes and fees.